ROA

Abbreviation for Return on Assets. A company's ability to operate profitably can be measured directly by calculating its return in three ways: 1. Return on total assets = a ratio of the attributable profits for the last 12 months to total assets (fixed and current) for the same period, expressed as a percentage. It measures how effectively a company can generate earnings from its assets. 2. Return on fixed assets = the ratio of attributable profits to fixed assets alone, expressed as a percentage. It measures how effectively a company can generate earnings from its long-term assets such as land and machinery. 3. Return on capital employed (ROCE) = the ratio of operating profit to capital employed, expressed as a percentage. Capital employed equals shareholders' funds plus long-term liabilities, in other words all the long-term funds used by the company. The ratio measures the return on all sources of finance used by the company (i.e. equity plus debt) and is very similar to return on assets (which includes current liabilities).